Han v Customs and Excise Comrs (Martins v Customs and Excise Comrs, Morris v Customs and Excise Comrs)

For Article 6, domestic classification as civil is only the starting point. The court must apply the autonomous Convention meaning of a criminal charge and weigh the nature of the offence and the nature and severity of the penalty. In tax evasion cases, civil penalties for dishonest conduct are criminal charges where they apply generally, pursue punishment and deterrence, and are substantial. Civil procedure, mitigation, a civil burden of proof and the absence of imprisonment do not alter that conclusion. The classification applies for Convention purposes only and does not automatically make the proceedings criminal under domestic law or engage the Police and Criminal Evidence Act 1984.

The Commissioners of Customs and Excise appealed directly to the Court of Appeal from a preliminary ruling of the VAT and Duties Tribunal, reported at [2000] V & DR 312. The Tribunal had held that penalties imposed under section 60(1) of the Value Added Tax Act 1994 and section 8(1) of the Finance Act 1994 for dishonest evasion of VAT or excise duty were criminal charges for Article 6 purposes.

The appeals concerned Han, Yau, Martins and Morris. The central issue was whether the civil penalty regimes, having regard to their domestic classification, the nature of the alleged offences and the severity and purpose of the penalties, engaged Article 6 of the European Convention on Human Rights.

1. Majority outcome. Potter LJ delivered the principal judgment and dismissed the appeal. Mance LJ agreed. Sir Martin Nourse LJ dissented and would have allowed the appeal.
2. Convention test. The expression criminal charge has an autonomous Convention meaning. Domestic classification is only a starting point. The nature of the offence and the nature and degree of severity of the penalty carry substantially greater weight. The Engel v Netherlands criteria are factors to be weighed rather than a rigid three-stage test. The nature and severity criteria may be treated as alternative where one is decisive, but may be assessed cumulatively where neither produces a clear answer.
3. Application to the penalties. The penalties under section 60(1) of the Value Added Tax Act 1994 and section 8(1) of the Finance Act 1994 concerned dishonest evasion by taxpayers generally. Their purpose was punitive and deterrent, rather than compensatory, and the potential penalties were substantial. The parallel criminal offences under section 72 of the Value Added Tax Act 1994 showed that the civil regime was an alternative enforcement regime, not a complete decriminalisation of dishonest evasion. Civil terminology and procedure, mitigation, the civil burden of proof and the absence of imprisonment were insufficient to prevent the penalties being criminal charges for Article 6.
4. Consequences. The Convention classification applies only for Convention purposes. It does not automatically engage domestic criminal-investigation provisions such as PACE. The detailed consequences of Article 6, including evidential and self-incrimination issues, require case-by-case determination. A person subject to a section 60(1) penalty is nevertheless entitled to the minimum rights in Article 6(3).
5. Dissent. Nourse LJ gave greater weight to the deliberate civil classification, the tax-collection function, the fairness of the regime and the absence of imprisonment. He regarded the punitive effect as subsidiary and considered the penalties insufficiently serious to constitute criminal charges.

• Court of Appeal: The appeal by the Commissioners was dismissed by Potter LJ and Mance LJ. Nourse LJ dissented and would have allowed it.
• VAT and Duties Tribunal: On a preliminary issue, the Tribunal held that the penalties were criminal charges for Article 6 purposes. Its decision was reported at [2000] V & DR 312. Leave for a direct appeal was granted by Aldous LJ.